By Diana Palmieri
… Says George Jetson as his beloved dog Astro and a cat watch him go down and around on a spaced out treadmill.
I am guessing if anyone is paying attention to the markets all over the world, we all want to yell the same thing. Market volatility has certainly been the trend these days. There are several catalysts to this volatility, but one thing I feel is certain: Most of this noise is noise–and based on emotion and fear. We must pay close attention to our fears when these market swings happen. What was your reaction when the market dropped about 1,100 points back in August? Did you want to sell everything and hide under the blankets? I am hoping most of you said, “I did nothing,” and rode it out, especially if you are a long-term investor.
I feel that one of the biggest mistakes folks make with their retirement plans is selling out at a market bottom, then subsequently going back in and buying again at a market top. Market volatility over the past few months has been very sudden and quick–very sharp downturns, followed by swift upswings, thus causing an investor to miss out on gains potentially because selling on knee jerk emotional moments left them in cash. I have to admit that in all the years I have observed the markets I have never recalled seeing the volatility that occurred over these past summer months to the end of September. Even the usually perceived quiet bond markets have been trading in the same manner.
There are always going to be bad news, conflicts, currency issues, bankrupt companies, budget issues, defaults, and many other headlines that can potentially derail markets. You must remember that they will pass, conflicts will be resolved, and budgets will pass. Markets must go up and down. It is all part of a cycle. Over the past few weeks, we have seen some very nice rebounds in the market. But to reiterate what I said above, there is always going to be news, both good and bad. If you are in it for the long run, it’s okay to know what’s going on and to be cautious, but it’s how you react that will make all the difference.
Diana Palmieri is dually registered with Vanderbilt Securities LLC and H Beck Inc., which are unaffiliated. Securities offered through Vanderbilt Securities LLC, member SIPC/FINRA/MSRB.
